Boston Beer 2Q Revenue Fell 3.3%, Shipments Down 4.5%, Depletions Off 4.5%

Boston Beer Co. reports net income of $51.67 million, or $4.96 a share, down $8.87 million from $60.43 million, or $5.45 a share a year earlier. Net revenue fell 3.3% to %568.3 million as depletions decreased 6% and shipments decreased 4.5%.

The company ended the second quarter with $265.5 million in cash and no debt.

“As we continue to navigate a challenging operating environment, we are managing the business with discipline while investing behind our category-leading brands and bringing innovation to market” said Chairman, Founder and CEO Jim Koch.

“We are highly focused on marketplace execution for the remainder of the summer selling season and improving market share trends. Our strong cash flow generation and healthy balance sheet provide flexibility to support our strategic priorities and drive long-term value.”

CFO Diego Reynoso, said, “We delivered meaningful gross margin expansion and are maintaining our earnings outlook while navigating a dynamic consumer demand environment and input cost headwinds. These results demonstrate the progress we continue to make through our multi-year supply chain transformation efforts, combined with a disciplined approach to investment.”

Depletions for the second quarter, ended June 27, decreased 6% compared to the second quarter of the prior year. Shipment volume for the quarter was approximately 2 million barrels, a 4.5% decrease compared to the second quarter of the prior year due to decreases in Twisted Tea, Truly, Samuel Adams, Hard Mountain Dew and Dogfish Head brands that were partially offset by increases in Sun Cruiser and Angry Orchard brands.

The company said it believes distributor inventories as of June 27 were at appropriate levels and averaged about 4-1/2 weeks on hand which was consistent with the weeks on hand at the end of June 2025.

Revenue for the quarter decreased 3.3% due to decreases in volume partially offset by favorable product mix and pricing.

Gross margin of 50.4% increased from the 49.8% margin realized in the second quarter of 2025, or an increase of 60 basis points year over year. Gross margin primarily benefited from improved brewery efficiencies, favorable product mix, procurement savings and price increases, and were partially offset by inflationary, commodity and tariff costs.

The second quarter gross margin of 50.4% includes $1.6 million of shortfall fees and non-cash expense of third-party production pre-payments in total, which negatively impacted gross margin by approximately 28 basis points on an absolute basis.

Advertising, promotional and selling expenses for the second quarter of 2026 increased $26.2 million or 16.4% from the second quarter of 2025, resulting from increased brand local marketing and point of sale investments of $17.5 million and higher freight costs of $8.6 million due to higher rates partially offset by lower volumes.

General and administrative expenses increased $3.1 million compared to the second quarter of 2025 primarily due to increased legal fees and salaries and benefit costs. This increase included $1.4 million of legal fees related to the previously disclosed supplier dispute litigation.

A federal jury in Illinois recently awarded Ardagh Metal Packaging $175.5 million in damages after finding that Boston Beer breached a contract by failing to buy the equired minimum volume of aluminum cans between 2021 and 2025.

The company reduced its reserve in connection with that lawsuit by $19.4 million, consisting of a favorable adjustment to pre-judgement interest of $21.1 million and post-judgement interest expense of $1.7 million. Post-judgement interest expense through the appeals process will be applied to the combined pre-tax total of the judgment and pre-judgment interest amounts of $191 million at the statutory rate, which is estimated to be 3.79%.

The Company continues to deny that it breached the terms of the contract with the supplier and intends to pursue all available post-trial motions and appellate remedies. The Company cannot estimate when or if damages or interest will ultimately be paid or when this matter will ultimately be resolved.

In the second quarter of 2026, the combined pre-tax income related to the supplier dispute litigation of $18 million consists of legal expenses of $1.4 million, recorded in general and administrative expenses, and litigation reduction of $19.4 million. The after-tax impact on earnings per share is a benefit of $1.31 per share.

The Company’s effective tax rate for the second quarter was a provision of 28.7%. Excluding the impact of the supplier dispute litigation, the effective tax rate was a provision of 30.1% compared to a provision of 28.1% in the prior year.  This increase in rate is due primarily to the increased negative impact of non-deductible stock compensation.